Xchanging is gearing up for a renewed acquisition drive in 2007 after announcing it intends to float on the London Stock Exchange by the end of next month.

The outsourcing company said it planned to proceed with an initial public offering (IPO) of its ordinary shares and apply to be admitted to the official list of the FSA and for a stock exchange listing.

David Andrews, chief executive of Xchanging, said: "Since we founded this business in 1999, we have demonstrated sustained high growth and developed what we believe to be one of the leading international pure-play business process outsourcing companies.

"Being a public company will enable us to take even greater advantage of the exciting opportunities available to us as our markets continue to develop."

Primary proceeds from the IPO, which is understood will make at least £500m, will be used to fund continued business growth, including "selective" acquisitions.

This may include buying the interest of companies where Xchanging has taken over its back office and created a jointly-owned business with the customer, known as an enterprise partnership.

It is expected that some existing shares will also be sold by current shareholders, including General Atlantic, the private equity company, which owns 54% of the fully diluted share capital.

General Atlantic is expected to retain a significant holding in Xchanging after the IPO.